- Revenue up 3percent YoY, below forecasts
- Net profit down 22 percent YoY on costs, taxes
- Hold rating, target cut to HKD 2.3
China Education Holdings (00839.HK), a key player in China's private education sector, posted disappointing first-half results, prompting HSBC Global Research to cut its target price. Revenue grew a mere 3% year-on-year, missing expectations due to shifting student and parent preferences, fierce competition from public institutions, and macroeconomic headwinds.
Net profit attributable to shareholders plunged 22% year-on-year, hit by surging administrative expenses and elevated effective tax rates.
Also Read: US-China Education Clash Intensifies as Harvard Loses Foreign Student Certification
Despite the setback, HSBC highlights the stock's attractive valuation at 3.6 times forecast FY2026 price-to-earnings and 0.4 times price-to-book (excluding goodwill and intangibles). However, uncertainty over dividend resumption continues to pressure shares. The bank retains a 'Hold' rating while trimming the target from HKD 3.2 to HKD 2.3.
China Education Holdings' challenges underscore broader pressures on private education stocks amid China's regulatory shifts and economic slowdown.
